A massive backlog in Vancouver ports that has prevented grain from last year's bumper harvest from getting to overseas customers has prompted the Bank of Montreal to extend financial relief to prairie farmers.
Vancouver ports, railways and shipping companies are still dealing with a massive backlog of grain from last fall's bumper harvest. Wheat production was up by about 38% over the previous year and canola up 30%.
A bottleneck at Vancouver ports was caused by Canada's railways being overwhelmed by a bumper crop and a severe winter. A month-long port truckers earlier this year aggravated the problem.
The grain backlog is still being cleared. It has underscored what Levi Wood, president of the Western Canadian Wheat Growers Association, believes to be a systemic problem with Canada's two railways, which he said does not have the ability to deal with surges in grain production.
"It's a grain issue this year, because it's the most acute problem, but really this is an issue that impacts every commodity," said Wood.
Seventy per cent of prairies grain is exported and Vancouver ports are the single largest export point.
Port Metro Vancouver reports that bulk grain volumes were down 5% in the first three months of this year compared with the same period in 2013 – despite the fact prairies farmers had produced crops that were at least 35% above the previous year, and even higher in some areas.
The surplus has left farmers unable to get their grain to market. In March, BMO announced aid in the form of loan deferrals and flexible terms on new lines of credit.
"The program we announced in March has been extended until the end of June this year," Steve Murphy, BMO's head Canadian commercial banking, said in a press release.
"While some progress has been made to alleviate the backlog, we want to ensure there is ample time for our customers who are grain producers and in other related businesses to assess the financial impact and any cash flow disruptions that could impede financing crop expenses for the up-coming season."
